Suburb office property in strong demand.
As in other markets, top-tier, well-leased office properties in the suburbs are in strong demand as low interest rates and a volatile stock market continue to attract investors to real estate.
The Jersey City waterfront remains one of our core markets, with Mack-Cali still owning over 3 million square feet of office properties there as well as buildable land.
With regards to leasing activity, businesses--especially large space users--remain reluctant to make long-term decisions about capital spending, employment and office space. This is because the economic recovery we've all been looking for has been slow in coming, and we have yet to see any job growth in our core suburban markets in the Northeast. New sublease space is abating, but continues to put downward pressure on rents in certain markets.
There has been steady activity from small and mid-sized users, however, many making "flight to quality" moves. We've seen several businesses take advantage of the soft market and migrate out of class B and C buildings and move up to our class A properties.
Although we have yet to see widespread recovery, there has been some positive momentum in certain submarkets such as Union and Monmouth counties in New Jersey, as well as in Westchester County, New York.
The Bergen County submarket is also faring well. Markets such as Essex and Morris counties, which were affected by the downturn in telecommunications and technology, continue to face an abundance of sublease space.
In Jersey City, space showings have picked up considerably along the waterfront due to Governor McGreevey's recent reinstatement of the BEIP program. The reopening of the PATH station at Exchange Place is another boost for this market. We were happy to have recently signed leases of over 43,000 square feet with Moody's Investors Service and 20,000 square feet with the Office of Thrift Supervision at our Harborside Financial Center Plaza 5 on the waterfront.
Until there is sustained economic and employment growth, we do not expect to see significant improvement in real estate markets.
But despite the challenging economy, Northeast markets are generally outperforming most other markets throughout the country because of their high barriers-to-entry, limited new inventory, and diverse macro economies.
MITCHELL E. HERSH, CHIEF EXECUTIVE OFFICES, MACK-CALI REALTY CORPORATION
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|Title Annotation:||Suburban Markets|
|Author:||Hersh, Mitchell E.|
|Publication:||Real Estate Weekly|
|Date:||Oct 15, 2003|
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